Exploring the Strategic Role of Private Equity Secondaries

November 1, 2023 / Global Investments

Over the past 10 years, the investment opportunities within Private Equity (PE) have surged, transforming the financial landscape and fostering a new era of capital allocation. With this growing demand in PE investment, the need for liquidity has become more pronounced, advancing the need for PE secondaries. As such, PE secondaries have undergone a significant evolution, growing from a cottage industry in the early 1990s to a genuine means for bolstering liquidity and rebalancing investment portfolios.

This investment paper will delve into the growth of PE secondaries over the past decade, exploring their prominence as a key investment instrument for enhancing liquidity, managing risk, and the potential benefits for investors, as well as the role they can play in investor portfolios.

Throughout Barwon Investment Partners’ 16-year history, we have seen significant deal flow in PE secondaries through our relationships with both GPs and specialist secondary market brokers. Barwon’s flagship Global Listed Private Equity strategy invests in a portfolio of Listed Private Equity securities and in many regards can be seen as a portfolio of private equity secondaries, which happen to be traded on public exchanges.

We believe private equity secondaries are compelling investment strategies through-the-cycle. However, they are particularly compelling at this point in the cycle when account is taken of the discount they trade at relative to NAV, currently amongst the widest we have seen in our history of following the asset class.

We hope you enjoy this paper.

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